CBDT instructed officials to not issue new notices to small taxpayers

income tax notices

The Income Tax Department has instructed field offices not to issue reassessment income tax notices to small taxpayers with income escaping tax of less than Rs 50 lakh for the fiscal years 2012-13, 2013-14, and 2014-15. The department said that for FY16 and FY17, where the timeline for issue of such notices falls within the three-year reassessment period, tax officers will issue show-cause notices and provide information to taxpayers for initiating reassessment proceedings within 30 days.

The Central Board of Direct Taxes (CBDT) has asked tax officers to give taxpayers two weeks to respond to such notices, with the possibility of an extension if the taxpayer requests it.

The Supreme Court ruled in favour of the Income Tax Department earlier this month, upholding all reassessment notices issued on or after April 1, 2021, reopening assessments dating back up to six years. The government reduced the reopening time for I-T assessments from 6 to 3 years in the Budget last year (2021-22).

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The tax department, on the other hand, has issued lots of new notices for reopening assessments dating back more than three years. The I-T Department then appealed to the Supreme Court to uphold the notices, which were challenged in several high courts. CBDT has issued this much-needed instruction, according to expert, in order to provide clarity to both tax officials and taxpayers, as well as to ensure that Supreme Court orders are interpreted and implemented uniformly in all 90,000 or so cases across India.

Under the old regime ( Section 148) the tax office could go back to six years in case of undisclosed income. The law was changed in April 2021. Now, the I-T department under the new regime (148A) can reopen 10-year-old tax returns if total income which has escaped tax is more than Rs 50 lakh and reassess three-year-old matters if income is less than Rs 50 lakh.

Sources in the department said that the fresh notices would process under new regime ( Section 148A) will be done by jurisdictional officers. Then it will pass to Faceless Authority for scrutiny assessment.

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